IN THE
MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN
OPERATIONS FOR THE CODELL FORMATION, HEREFORD FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 421

DOCKET NO. 150300081

ORDER NO. 421-69

TYPE: SPACING

REPORT
OF THE COMMISSION

The
Commission heard this matter on July 20, 2015 at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street,
Suite 801, Denver, Colorado upon application for an order to establish eleven
approximate 1280-acre drilling and
spacing units for several sections in
Township 11 and 12 North, Range 62 and 63 West, 6th P.M., and to approve six horizontal wells within each
unit, for the production of oil, gas, and associated hydrocarbons from the Codell
Formation.

FINDINGS

The
Commission finds as follows:

1.
EOG Resources, Inc. (Operator No. 27442) (“EOG” or “Applicant”) is an
interested party in the subject matter of the above-referenced hearing.

2.
Due notice of the time, place and purpose of the hearing has been given in
all respects as required by law.

3.
The Commission has jurisdiction over the subject matter embraced in said
notice, and of the parties interested therein, and jurisdiction to promulgate
the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.

4. Rule 318.a. of the Commission Rules provides a well
that is to be drilled 2,500 feet or greater shall be located not less than 600
feet from any lease line, and shall be located not less than 1,200 feet from
any other producible or drilling oil or gas well when drilling to the same
common source of supply, unless authorized by the Commission upon hearing.

5. On December
22, 2014, EOG, by its attorneys, filed with the Commission a verified
application (“Application”) pursuant to §34-60-116 C.R.S. for an order to
establish eleven approximate 1280-acre
drilling and spacing units.

6.
On March 19, 2015, EOG, by its attorneys, filed with the Commission a
verified amended application (“Application”) pursuant to §34-60-116 C.R.S. for
an order to establish eleven approximate 1280-acre
drilling and spacing units for the below-described lands (“Application Lands”)
and to approve six horizontal wells within each
unit, for the production of oil, gas and associated hydrocarbons from the
Codell Formation, with the productive interval of the wellbore to be located no
closer than 460 feet from the unit boundaries, and no closer than 150 feet from
the productive interval of any other wellbore producing from the same source of
supply within the unit, without exception being granted by the Director:

Township 12 North, Range 62
West, 6th P.M. – DSU #1

Section 20: All (All
portions lying within the State of Colorado)

Section 29: All

Township 12 North, Range 62
West, 6th P.M. – DSU #2

Section 19: All (All
portions lying within the State of Colorado)

Section 30: All

Township 12 North, Range 62
West, 6th P.M. – DSU #3

Section 32: All

Township 11 North, Range 62
West, 6th P.M.

Section 5: All

Township 12 North, Range 62
West, 6th P.M. – DSU #4

Section 31: All

Township 11 North, Range 62
West, 6th P.M.

Section 6: All

Township 11 North, Range 62
West, 6thP.M. – DSU #5

Section 7: All

Section 18: All

Township 11 North, Range 63
West, 6th P.M. – DSU #6

Section 10: All

Section 15: All

Township 11 North, Range 63
West, 6TH P.M. – DSU #7

Section 11: All

Section 14: All

Township 11 North, Range 63
West, 6th P.M. – DSU #8

Section 12: All

Section 13: All

Township 11 North, Range 63
West, 6th P.M. – DSU #9

Section 22: All

Section 27: All

Township 11 North, Range 63
West, 6th P.M. – DSU #10

Section 23: All

Section 26: All

Township 11 North, Range 63
West, 6th P.M. – DSU #11

Section 24: All

Section 25: All

7.
On June 29, 2015, EOG, by its attorneys, filed with the Commission a
written request to approve the Application based on the merits of the verified
Application and the supporting exhibits. Sworn written testimony and exhibits
were submitted in support of the Application.

8.
Land testimony and exhibits submitted in support of the Application by Jason
McLaren, Land Manager for EOG showed that EOG holds oil and gas leasehold
interests and has a right to drill in the Application Lands.

9.
Geologic testimony and exhibits submitted in support of the Application
by Matthew Nobles, Petroleum Geologist for EOG showed that the Codell Formation
is present throughout the Application Lands, is approximately 18 to 23 feet
thick, and is generally of uniform thickness throughout the Application Lands.

10.
Engineering testimony and exhibits submitted in support of the Application
by Danny Frederick, Reservoir Engineer for EOG, showed
that the drainage area for analog horizontal Codell Formation wells are
estimated at 156 acres, and an appropriate 1280-acre
drilling and spacing unit is therefore not less than the maximum area than can
be efficiently, economically and effectively drained by six horizontal
wells producing oil, gas and associated hydrocarbons from the Codell Formation.

11.
The above-referenced testimony and exhibits show that granting the
Application will allow more efficient reservoir drainage, will prevent waste,
will assure a greater ultimate recovery of hydrocarbons, and will not violate
correlative rights.

12.
EOG agreed to be bound by oral order of the Commission.

13.
Based on the facts stated in the verified Application, having received no
protests, and based on the Hearing Officer review of the Application under Rule
511, the Commission should enter an order to establish
eleven approximate 1280-acre
drilling and spacing units for for several
sections in Township 11 and 12 North, Range 62 and 63 West, 6th P.M., and approve six horizontal wells within each unit,
for the production of oil, gas and associated hydrocarbons from the Codell
Formation.

ORDER

IT
IS HEREBY ORDERED:

1.
Eleven approximate 1280-acre drilling
and spacing units for the below-described lands,
are hereby established, and a total of six horizontal wells within each unit, are
hereby approved, for the production of oil, gas and associated hydrocarbons
from the Codell Formation:

Township 12 North, Range 62
West, 6th P.M. – DSU #1

Section 20: All (All
portions lying within the State of Colorado)

Section 29: All

Township 12 North, Range 62
West, 6th P.M. – DSU #2

Section 19: All (All
portions lying within the State of Colorado)

Section 30: All

Township 12 North, Range 62
West, 6th P.M. – DSU #3

Section 32: All

Township 11 North, Range 62
West, 6th P.M.

Section 5: All

Township 12 North, Range 62
West, 6th P.M. – DSU #4

Section 31: All

Township 11 North, Range 62
West, 6th P.M.

Section 6: All

Township 11 North, Range 62
West, 6thP.M. – DSU #5

Section 7: All

Section 18: All

Township 11 North, Range 63
West, 6th P.M. – DSU #6

Section 10: All

Section 15: All

Township 11 North, Range 63
West, 6TH P.M. – DSU #7

Section 11: All

Section 14: All

Township 11 North, Range 63
West, 6th P.M. – DSU #8

Section 12: All

Section 13: All

Township 11 North, Range 63
West, 6th P.M. – DSU #9

Section 22: All

Section 27: All

Township 11 North, Range 63
West, 6th P.M. – DSU #10

Section 23: All

Section 26: All

Township 11 North, Range 63
West, 6th P.M. – DSU #11

Section 24: All

Section 25: All

2.
The productive interval of the wellbore will be located no closer than 460
feet from the unit boundaries, and no closer than 150 feet from the productive
interval of any other wellbore producing from the same source of supply within
the unit, without exception being granted by the Director.

3. A
maximum of four surface locations will be allowed for development of
minerals from the Codell Formation within the drilling and spacing unit,
without exception being granted by the Director.

IT
IS FURTHER ORDERED:

1.
The provisions contained in the above order shall become effective
immediately.

2.
The Commission expressly reserves its right, after notice and hearing, to
alter, amend or repeal any and/or all of the above orders.

3.
Under the State Administrative Procedure Act, the Commission considers this
Order to be final agency action for purposes of judicial review within 35 days
after the date this Order is mailed by the Commission.

4.
An application for reconsideration by the Commission of this Order is not
required prior to the filing for judicial review.